Securities Law Litigation
Tollefsen Law Office PLLC has over 30 years experience representing investors who have been defrauded. The most powerful legal weapon against the perpetrators is usually state and federal securities laws. TLO also accepts selected securities fraud defense cases.
Securities Law
Both the federal and state governments have adopted securities laws. The federal law started with the Securities Act of 1933 ("Securities Act"), passed unanimously without debate after the stock market crash of 1929 led to the Great Depression. The next year the Exchange Act of 1934 was enacted to regulate stock trading. The Securities Act primarily addressed the law regarding issuing stock. It approach was not to limit access to the market by evaluating the merits of the offering, rather it would let the investor decide after full disclosure.
The states began enacting securities laws early in the 20th century. They were called "Blue Sky Laws" because the politicians claimed that stock promoters selling stock that was little more than blue sky. The political impetus of state laws was to prevent the selling of worthless securities. It therefore is generally a "merit" approach. Under state law it is not always enough to give full disclosure, the issuer must also comply with "fairness" rules. In most cases, an offering must comply with both federal and state securities laws.
In order to protect investors, the normal "caveat emptor" (buyer beware) was reversed to "seller beware." The seller of a security (or fraudulent purchaser) has the duty to disclose all material facts. Usually investor legal actions are by investors who thought they were buying a low risk security only to find out that it was in reality very risky.
State securities laws often provide the greatest protection to investors but require that the security be returned and limit damages to the amount of the net investment plus an interest rate and possible attorney fees.
Should you wait to see if the regulators recover your money?
Generally, you cannot expect securities regulators to recover your money. Although the SEC has the authority to get your money back, as a practical matter, it does so only when the defendant is able to pay back the money, which is extremely rare. Washington State regulators do not attempt to recover your money and Oregon does so only on rare occasions.
The securities laws make certain participants and potential supervisors liable if there is securities fraud. Usually recovery is from these individuals if they have "deep pockets" (the ability to pay. You will have to sue these people to recover your money.
Should you sue?
There are a number of things you need to know before you file a legal action. There are several pages of this website devoted to help you understand what is involved in litigation.